1.3 Marketing mix and strategy
- Created by: AmyBennet
- Created on: 02-04-17 17:48
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- 1.3 Marketing Mix and Strategy
- 1.3.1 Product/ Service design
- Design mix
- Cost
- Function
- Aesthetics
- Changes in the elements of the design mix to reflect social trends
- Design for waste minimisation
- Products that use a lot of energy to manufacture should be made more durable
- Products should be designed to be smaller and lighter
- Disposable products should be discouraged
- Left over resources could be used
- Design for re-use
- Make re-usable packaging
- Re-usable components of products
- Design for recycling
- Adaptation of production methods to incorporate waste resources
- Some businesses give wasted resources to other businesses for their use
- Ethical sourcing
- This is done by businesses which only source from places which respect the environment and treat employees well
- Design for waste minimisation
- Design mix
- 1.3.2 Branding and promotion
- Types of promotion
- Above the line promotion
- This is advertising in the media
- Informative advertising
- Adverts are designed to increase consumer awareness of a product
- Persuasive advertising
- Puts pressure on consumers to buy a product
- Reassuring advertising
- Aimed at existing customers so they feel like they made the right choice
- Below the line promotion
- Any type of promotion that doesn't involve advertising
- Sales promotions, public relations, merchandising and packaging, direct mailing, direct selling, exhibitions
- Above the line promotion
- Types of branding
- Manufacturer brands
- Created by the producers of goods and services
- Own-label brands
- Products which are manufactured for wholesalers or retailers by other businesses
- Generic brands
- Only contain product name rather than brand- usually sell for lower prices
- Manufacturer brands
- The benefits of strong branding
- Added value
- A strong brand can add value to a product in the eyes of consumers. This means they may be willing to pay more.
- Ability to charge premium prices
- Customer loyalty has been built up so the business can charge a higher price
- Reduced PEoD
- A price increase will have a small impact on demand
- Added value
- Ways to build a brand
- Exploiting a USP
- Advertising
- Sponsorship
- Using social media
- Changes in branding and promotion to reflect social trends
- Viral Marketing
- Social media
- Emotional branding
- Types of promotion
- 1.3.3 Pricing strategies
- Cost-plus pricing
- Involves adding a percentage of the cost onto the cost to get the selling price
- Ensures profitability
- Ignore the market conditions
- All costs may be difficult to identify
- Price skimming
- A high price is charged to begin with to generate large amounts of revenue before competitors arrive
- This exploits the popularity of a product whilst it is unique
- Penetration pricing
- A low price is charged at introduction. this is to gain market share.
- Businesses hope customers are attracted by the low price but continue to buy when the price rises
- Beneficial when products are targeted at low income groups
- Grows sales quickly
- Puts pressure on rivals
- Predatory pricing
- Aims to eliminate competitors from the market
- A very low price is charged until a competitor leaves the market
- Some forms are illegal in the UK
- Competitive pricing
- Used in competitive markets
- Businesses charge the same price as competitors
- Another approach is for the market leader to set the price and the rest follow
- Psychological pricing
- set price slightly below a round figure so it seems smaller
- Factors that determine the most appropriate pricing strategy
- Differentiation and USP
- PEoD
- Amount of competition
- Strength of brand
- Stage in product life cycle
- Costs and the need to make a profit
- Changes in pricing to reflect social trends
- Online sales
- Auction sites
- Allows sellers to get the best possible price for goods. Customers fear losing out if they wait too long which can increase sales.
- Dynamic pricing
- Prices vary and are flexible. The aim is maximising revenue and profits by filling capacity.
- Businesses still use conventional strategies but need to be online to meet customer needs
- Personalised pricing
- Involves the use of data relating to a specific online shopper.
- Subscription policy
- Usually involves charging customers a regular monthly fee. Can make cash flow more predictable
- Auction sites
- Online sales
- Cost-plus pricing
- 1.3.4 Distribution
- Distribution channels
- Direct selling
- Retailing
- Wholesaler
- Agents or brokers
- Changes in distribution to reflect social trends
- Online sales
- Business to consumers
- Business to business
- Changing from product to service
- Online sales
- Choosing the appropriate distribution channel
- The nature of the product
- Cost
- The market
- Control
- Distribution channels
- 1.3.5 Marketing strategy
- The product life cycle
- Product development
- Product is being researched and designed
- A large number of products don't progress beyond this stage
- Businesses are reluctant to take risks associated with new products
- Costs are high
- No sales revenue is generated
- Introduction
- Product is launched
- Sales are often slow
- Lots is spent on promotion
- Product is unlikely to profiable
- prices may be high to cover costs
- Growth
- Consumers are aware of product
- Sales rapidly increase
- Unit costs are low
- Competitors may make their own version
- Price and promotion need to be considered
- Maturity
- Stable market share is established
- Sales have peaked
- Competitors are in the market
- Extension strategies are used
- Decline
- Sales decline
- Customers change their opinion
- Will be withdrawn or sold to another business
- A profit can still be made if the price is high enough
- Product development
- Extension strategies
- Product
- Updating
- Adding value
- Extended product range
- New packaging
- Promotion
- Find new uses for the product
- Find new markets
- Invest in an advertising campaign
- Encourage more frequent use of a product
- Product
- The Boston Matrix
- Stars
- High market growth
- High market share
- Strong position
- Profitable
- Will need to be invested in
- Net cash flow is zero
- Cash cows
- High market share
- Low market growth
- Profitable
- Little chance of increasing sales
- need for investment
- Question marks
- low market share
- High market growth rate
- Unlikely to be profitable
- Needs investment
- Dogs
- low market share
- low market growth
- poor future prospects
- Need little investment
- Stars
- Balancing product lines
- Stars have future potential. They are future cash cows. A business needs to build their brand
- cash cows will be used to develop other products. Businesses need to spend enough on them to maintain market share
- Dogs may be divested or harvested if they don't make a profit
- Question marks can be built into a brand, harvested, or divested
- Marketing strategies
- mass markets
- Product: lots of substitutes so businesses need to develop a USP
- Price: Price leadership is common to prevent a price war
- Promotion: Businesses try to stand out by advertising
- Place: Multiple channels are used
- Niche markets
- Product: likely to be different from competition
- Price: More flexibility. Less competition so prices can be higher
- Promotion: Advertising is targeted
- Place: selective with distribution channels
- mass markets
- Developing customer loyalty
- Communication
- Customer service
- Incentives
- Personalisation
- Preferential treatment
- Outbound marketing strategies
- Inbound marketing strategies
- The product life cycle
- 1.3.1 Product/ Service design
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